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Moore Capital Management's founder has had a tough few years, but he's still outdoing his peers--and planning his legacy
By Stephen Taub
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| Louis Bacon: Watching half your asset base redeem even while performing in a stable manner was too unnerving for heroic investing |
Trip Kuehne, founder of Dallas fund of funds Double Eagle Capital Management, had been searching for a global macro manager for three years when he approached Stanley Druckenmiller for a recommendation. The Duquesne Capital Management founder, who was managing money for Kuehne at the time, suggested one of his generation's best: Louis Bacon, founder of Moore Capital Management. "He said he was great and he won't blow you up," Kuehne recalls. "He'll conserve your money." |
Somewhat ironically, Kuehne invested with Bacon last June, the month after Bacon suffered his worst-ever monthly loss--9.2%--in part because of the macro manager's belief that the euro would fall apart. "I got fairly lucky," Kuehne says.
But has Bacon's luck run out? In 2010, he came back to post a 4.58% gain in the flagship but is floundering again this year--with many funds in the red through May. As has been the case with so many of his peers, recent years have been challenging in many ways. While grappling with last year's tough markets, Bacon ran into trouble with regulators, with a London trader accused of insider trading and the New York operation settling charges with the U.S. Commodity Futures Trading Commission that it tried to manipulate the settlement prices of platinum and palladium futures contracts on the New York Mercantile Exchange.
Yet more than 20 years after launching his first hedge fund, the 54-year-old Bacon, who is super secretive even by hedge fund standards, still enjoys elite status among the hedge fund set. In the past four years, his total returns have outshone those of his closest macro rivals: Paul Tudor Jones and Caxton's Bruce Kovner. But the yearly numbers have been volatile. Bacon lost 4.32% in his flagship in 2008--lagging AR's Macro Index as well as Jones and Kovner, but he vastly outperformed those managers in 2009 with a 22% gain. (Bacon told investors he was disappointed in the showing, "given the opportunities at hand.") This year things are dicey. Through May, the flagship...